U.S. Grain Groups Want Action As Brazil Slaps Tariffs on Ethanol

U.S. Grain Groups as calling upon the government this week to respond to tariffs Brazil slapped on U.S. ethanol.

Growth Energy, the Renewable Fuel Association and the U.S. Grains Council want lawmakers to take action after Brazil’s Chamber of Foreign Trade imposed a two-year tariff-rate quota for ethanol imports late August.

Under the tariff rate quota, a 20 percent tariff is tacked on U.S. ethanol products once Brazil surpasses imports of 600 million liters or 158.5 million gallons from the United States. According to Census Bureau trade data, U.S. ethanol exports to Brazil are at 1.17 billion liters or 310 million gallons through July this year.

Tom Sleight, president and CEO of U.S. Grains Council says Brazil is not breaking any World Trade Organization rules with the temporary tariff, just a working agreement and understanding the U.S. had with Brazil, working together as two leading bio-fuel suppliers in the world.

“To inject a move into this arena makes no sense when just barely months ago, two industries were talking together about how we can continue to expand global trade in bio-fuels and let each compete with each other but on a level playing field,” said Sleight. “Brazil made this move to institute a tariff rate quota and tariff and it is just contrary to the spirit that the two industries have working together for several years now. It’s really quite alarming to see this happen.”

Growth Energy says the trade barrier could threaten over $750 million in U.S. exports and American jobs.

“With ethanol production remaining a significant market for American corn and America’s farmers facing low commodity prices, government inaction on this vital issue would signal a detrimental economic downturn,” said Emily Skor, CEO with Growth Energy.

Sleight says a win-win for the grains industry is to have the two agricultural sectors talk to each other about the tariff. He says that may include Ag. Secretary Sonny Perdue engaging in talks with Brazil’s Minister of Agriculture, Blairo Maggi.

“Maggi from what we understand was a big player in arguing for this tariff to be instituted. Sec. Perdue has established a good working relationship with Mr. Maggi. Sit down and talk this through and press upon that this is not in either of our country’s interests to start down this road,” said Sleight.

Sleight says there are other measures to take if engaging in talks doesn’t work.